Reorder point and safety stock
The two numbers that decide whether you run out before the next delivery arrives.
Last checked 20 September 2026
The reorder point is the stock level at which you place the next order. It is demand during the supplier’s lead time, plus safety stock to absorb the days when sales spike or delivery is late. Order at that level and stock arrives roughly as the shelf empties.
The formula
| Formula | |
|---|---|
| Lead-time demand | Average daily sales × lead time in days |
| Reorder point | Lead-time demand + safety stock |
A worked example. You sell 20 units a day. Your supplier takes 7 days. You hold 40 units of safety stock.
- Lead-time demand = 20 × 7 = 140 units
- Reorder point = 140 + 40 = 180 units
So when stock falls to 180, you order. Over the next seven days you sell about 140, arriving at roughly 40 — your safety stock — as the delivery lands.
Reorder Point Calculator — free, no signupPut your own numbers in, including an "order now?" check against current stock.Safety stock: two ways to set it
Max minus average
The simpler method, and usually good enough. Take the worst case and subtract the normal case:
Safety stock = (max daily sales × max lead time) − (average daily sales × average lead time)
With 20 average and 35 peak daily sales, and a lead time of 7 days normally but 10 at worst: (35 × 10) − (20 × 7) = 350 − 140 = 210 units. Higher than the 40 above — which tells you something real about how variable that item is.
Service level
The statistical method. You choose how often you are willing to run out and work back from the variability of demand:
Safety stock = Z × standard deviation of daily demand × √(lead time in days)
| Service level | Z | Means |
|---|---|---|
| 90% | 1.28 | Out of stock in about 1 cycle in 10 |
| 95% | 1.65 | About 1 in 20 |
| 97.5% | 1.96 | About 1 in 40 |
| 99% | 2.33 | About 1 in 100 |
Do not put everything at 99%
Safety stock costs money and the cost climbs steeply as the service level approaches 100%. Give your fast, high-margin and hard-to-substitute lines a high level. Let the long tail sit at 90% and occasionally run out.
How much to order: EOQ
The reorder point says when. Economic order quantity says how much, by balancing the cost of ordering often against the cost of holding stock:
EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year)
Treat the answer as a sanity check rather than an instruction. It assumes steady demand and ignores the bulk discounts and minimum order quantities that usually decide the real answer.
EOQ Calculator — free, no signupHow much to order each time to keep costs lowest.Getting the inputs right
- Average daily sales: use a recent period that is actually representative. Include the zero days — averaging only the days you sold something overstates demand.
- Lead time: measure it, do not take the supplier’s word. Time from placing the order to goods on the shelf, including the day they sat in receiving.
- Seasonality: a single average is wrong for a seasonal line. Recalculate before the season, not during it.
- Review it. Sales rates drift. A reorder point set eighteen months ago is guessing.
Once you have a number, store it against the item so the system can tell you — in TracEasy that is the alert threshold; see add a product.
Should every item have a reorder point?
Every item you intend to keep in stock. For made-to-order or one-off lines it makes no sense.
What if my supplier is wildly unreliable?
Then the max lead time in the calculation is large and your safety stock is expensive — which is an accurate representation of what that supplier costs you. It is a useful number to take into the next negotiation.
Should expiry change the calculation?
It should cap it. There is no point holding six months of safety stock for something with four months of shelf life. See batch tracking and FEFO.